ACIT, Chandigarh V. M/s Chitkara Educational Trust, Chandigarh

ITA 960/CHANDI/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95568 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-09-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 05-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJINDER KAUR
• Assessee Lawyers: VINEET KRISHAN
• Keywords: Charitable institution; Rule of consistency
• Section: 6; 12; 11; 143(3); 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 960/CHD/2014 ASSESSMENT YEAR: 2011-12 THE ACIT, VS M/S CHITKARA EDUC ATIONAL TRUST, SECTOR 17-E, HOUSE NO. 1097, SECTOR 18-C, CHANDIGARH. CHANDIGARH. PAN: AAATC6244M (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. RAJINDER KAUR, DR RESPONDENT BY : SHRI VINEET KRISHAN DATE OF HEARING : 24.09.2015 DATE OF PRONOUNCEMENT : 09.10.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. CIT(APPEALS) CHANDIGARH DATED 22.08.2014 FOR ASSESSMENT YEAR 2011-12 ON THE FOLLOWING GROUNDS : 1. THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. THE LD. CIT(A) HAS ERRED IN ALLOWING THE EXEMPT ION U/S 11 OF THE ACT WITHOUT CONSIDERING THE FACTS THAT THE A SSESSEE HAS VIOLATED THE CONDITION U/S 13. 3. THE LD. CLT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS. 48,01,183/- ON ACCOUNT OF INTEREST ON LOAN FOR ASSETS NO T PUT TO USE U/S 36(1)(III) OF THE ACT WITHOUT CONSIDERING THAT THE CONDITION U/S 13 ARE CLEARLY VIOLATED. 4. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 18,72,000/- U/S 37 ON ACCOUNT OF INTEREST ON INTEREST FREE ADVANCES WITHOUT CONSIDERING THE FACTS THAT EXEMPTION U/S 11 C OULD NOT BE 2 ALLOWED TO THE ASSESSEE IN VIEW OF THE CONDITIONS LA ID DOWN IN SECTION 13 OF THE ACT. 5. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 1,30,000/- ON ACCOUNT OF EXPENDITURE ON DONATION WIT HOUT CONSIDERING THE FACTS THAT THE EXEMPTION U/S 11 COU LD NOT BE ALLOWED TO THE ASSESSEE IN VIEW OF THE CONDITIONS LAID DOWN IN SECTION 13 OF THE ACT. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSI DERED THE MATERIAL AVAILABLE ON RECORD. 3. GROUND NO. 1 IS GENERAL AND NEED NO ADJUDICATION . 4. ON GROUND NO. 2, REVENUE CHALLENGED THE ORDER OF LD. CIT(APPEALS) IN ALLOWING THE EXEMPTION UNDER SECTIO N 11 OF THE ACT WITHOUT CONSIDERING THE FACT THAT ASSESSEE HAS VIOLATED THE CONDITIONS OF SECTION 13 OF THE INCOME TAX ACT. 5. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN EDUCATIONAL TRUST AND WAS GRANTED REGISTRATION U /S 12AA OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFER RED TO AS 'ACT'). RETURN OF INCOME WAS FILED BY THE ASSESS EE DECLARING 'NIL' INCOME AFTER CLAIMING EXEMPTION U/S 11(1) OF THE ACT. THE ASSESSEE HAD TAKEN GROUND FLOOR AND BA SEMENT OF THE BUILDING AT SCO-160-161, SECTOR-9-C, CHA NDIGARH ON RENT FROM SHRI MOHIT CHITKARA WITH EFFECT FROM 01.04.2008 ON MONTHLY RENT OF RS. 6,00,000/-PER MON TH. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE TRU ST HAD GIVEN RENT SECURITY OF RS.1,74,00,000/- TO SHRI MOHIT CHITKARA, WHO HAPPENED TO BE ONE OF THE TRUST EES ALSO. THE ASSESSING OFFICER MADE COMPARISON OF RENT AND 3 SECURITY PAID IN RESPECT OF OTHER BUILDINGS WITH TH IS BUILDING AND OBSERVED AS UNDER: (A) MONTHLY RENT OF RS. 5,26,OOO/- HAD BEEN PAID FOR 10520 SQ. FT. WITH 5% INCREASE EVERY YEAR OF TH E LAST RENT PAID IN RESPECT OF DAINIK BHASKAR BUILDING, SECTOR-25, CHANDIGARH WITH INTERE ST FREE SECURITY OF RS. 11,00,000/-. (B) ANOTHER PROPERTY WAS TAKEN ON RENT AT DAINIK BHASKAR BUILDING, SECTOR-25, CHANDIGARH AT MONTHLY RENT OF RS. 5,41,600/- WITH COVERED AREA OF 13,540 SQ. FT. AND INTEREST FREE SECURITY OF RS. 11,30,800/-. (C) THE RATIO OF SECURITY PAID TO RENT WAS 2 TO 3 TIMES IN RESPECT OF OTHER BUILDINGS AS COMPARED TO 29 TIMES IN THE CASE OF PROPERTY TAKEN FROM SHRI MOHIT CHITKARA. 5.1 THE ABOVE OBSERVATIONS WERE BROUGHT TO THE NO TICE OF THE ASSESSEE BY THE ASSESSING OFFICER AND IT WAS CONVEYED TO THE ASSESSEE THAT SHRI MOHIT CHITKARA F ALLS WITHIN THE CATEGORY OF PERSONS DEFINED IN SECTION 13(3)(CC) OF THE ACT. IT WAS ALSO CONVEYED TO THE A SSESSEE THAT THE INTEREST FREE RENT SECURITY GIVEN TO SHRI MOHIT CHITKARA WAS MUCH MORE THAN WHAT WAS GIVEN TO OTHER LANDLORDS AROUND THE SAME TIME. ACCORDING TO THE ASSESSING OFFICER, THERE WAS DIVERSION OF FUNDS TO THIS EXTENT BY THE TRUST AND AS PER SECTION 13(L)(C) OF THE ACT, SUCH INCOME WAS NOT TO BE EXCLUDED FROM THE TOTAL INCOME AND PROVISIONS OF SECTION 11 WERE NOT APPLIC ABLE TO THE ASSESSEE. THE ASSESSEE WAS ASKED TO SHOW CAU SE AS TO WHY THE EXEMPTION CLAIMED U/S 11 OF THE ACT B E NOT DENIED AS THERE WAS VIOLATION OF PROVISIONS LAI D DOWN IN SECTION 13 OF THE ACT. 4 6. THE ASSESSEE IN RESPONSE TO SHOW CAUSE NOTICE SUBMITTED THE REPLY BEFORE ASSESSING OFFICER WHICH IS SUMMARIZED BELOW : (I) AT THE TIME OF HIRING THE AREA FROM SHRI MOHIT CHITKARA IN THE YEAR 2008, ONLY ABOUT 3000 SQ. FT. WAS REQUIRED AND SO ONLY BASEMENT AND GROUND FLOOR WERE HIRED IN THE IMPUGNED BUILDING AND IT WAS AGREED UPON THAT THE LANDLORD WILL NOT-RE NT OUT FIRST AND SECOND FLOOR WITHOUT THE CONSENT OF THE APPELLA NT, SINCE THE ASSESSEE MAY BE IN NEED OF FURTHER ACCOMMODATION IN FUTURE. SUBSEQUENTLY, THE ASSESSEE HAD TAKEN FIRST AND SECO ND FLOOR ALSO ON RENT WITH EFFECT FROM 01.04.2010. (II) THE MARKET RENT FOR BASEMENT AND FIRST FLOOR W AS AROUND RS. 10,00,000/- AND THE ASSESSEE NEGOTIATED IT FOR RS. 6,00,000/- WITH PAYMENT OF SECURITY. EVEN BY CONSIDE RING THE INTEREST AT BANK RATE ON THE SECURITY AMOUNT, THE RE NT WAS LESS THAN THE MARKET RENT AND SO PROVISIONS OF SECTION 13 WERE NOT APPLICABLE. (III) THE PREMISES WERE HIRED IN THE YEAR 2008 AND THE ISSUE WAS THOROUGHLY EXAMINED BY THE THEN ASSESSING OFFICE R IN A.Y. 2009-10 AND RENT & SECURITY WAS HELD TO BE REASONAB LE. RETURNED INCOME WAS ACCEPTED IN THAT YEAR. THE ASSESSEE HAD A LSO MADE REFERENCE TO THE SUBMISSION DATED 21.11.2011 FILED IN THE ASSESSMENT PROCEEDINGS OF A.Y. 2009-10. (IV) THE ASSESSING OFFICER HAD ACCEPTED THE SECURITY AS ADEQUATE IN A.Y. 2009-10 AFTER CONSIDERING THE FACILITIES PROVIDED IN CLUDING FULLY FURNISHED AND CENTRALLY AIR CONDITIONED BUILDING, FRE E FURNITURE, VITRIFIED TILES, CABINS, FALSE CEILING ON ROOFS, BACK UP GENERATOR SET OF 125KVA, 24 HOURS RUNNING WATER AND ELECTRICITY FACILITIES ET C. (V) THE PAYMENT WAS NOT MADE DURING THE A.Y. 2011- 12 AND SO NO BENEFIT WAS PASSED ON TO THE TRUSTEE DURING THE YEAR UNDER REFERENCE. (VI) OTHER BUILDINGS WERE HIRED AT MARKET RATE WH EREAS THE RENT PAID TO SHRI MOHIT CHITKARA WAS LESS THAN MARKET RATE . 5 (VII) DAINIK BHASKAR BUILDING IS ON THE OUTSKIRTS AT A S ECLUDED PLACE AND THE ASSESSEE HAD PUBLIC DEALINGS, FOR WHI CH CENTRAL PLACE WAS VERY IMPORTANT. (VIII) OTHER PREMISES ARE' NOT IN THE HEART OF THE CITY, WHEREAS THE PREMISES OF SHRI MOHIT CHITKARA ARE IN THE PRIM E COMMERCIAL AREA AND HENCE NOT COMPARABLE FOR RENTAL VALUE/ SEC URITY. (IX) SHRI MOHIT CHITKARA WAS NOT TO LET OUT THE FIR ST AND SECOND FLOOR WITHOUT THE CONSENT OF THE ASSESSEE, WHOSE MA RKET RENT WAS MORE THAN RS. 6,00,000/-. SUBSEQUENTLY, THESE FLOOR S WERE HIRED WITH EFFECT FROM 01.04.2010 I.E. AFTER TWO YEARS OF THE INITIAL HIRING AT A MONTHLY RENT OF RS. 1,50,000/- PER MONTH, WHIC H IS MUCH LESS THAN THE MARKET RENT. (X) THE FACT THAT RENT CHARGED WAS LESS THAN MARKET RENT IS ESTABLISHED FROM THE FACT THAT SHRI MOHIT CHITKARA HA D LET OUT 50 SQ. FT. AREA OF SECOND FLOOR WITH THE CONSENT OF THE AS SESSEE FOR RS. 8,500/- PER MONTH AS AGAINST RENT OF RS. 1,50,000/- PER MONTH FOR 5,882 SQ. FT, TAKEN BY THE APPELLANT (XI) THE EXEMPTION COULD NOT BE DENIED IN THE YEAR UNDER ASSESSMENT WHEN NO ADDITIONAL SECURITY WAS GIVEN IN RE SPECT OF THE FIRST AND SECOND FLOOR, WHICH WERE ALSO CENTRALLY AIR CONDITIONED, ON PALTRY RENT OF RS. 1,50,000/- PER MONTH FOR COVERED AREA OF 6942 SQ. FT I.E. RS. 21/- PER SQ. FT. RENT OF THE ENTIRE B UILDING WAS FIXED AT RS. 9Q,00,000/- PER YEAR WITH ALL THE FACILITIES FOR TOTAL COMMERCIAL AREA OF 12,110 SQ. FT. AND THE SAME RENT IS TO CONTI NUE UPTO THE YEAR 2023 EXTENDABLE FOR ANOTHER TEN YEARS AT THE OPTION OF THE LESSEE AND SO THE SECURITY GIVEN IN F.Y, 2009-10 IS NOT ON LY REASONABLE, BUT ON A MUCH LOWER SIDE. 7. THE ASSESSING OFFICER WAS, HOWEVER NOT SATISF IED WITH THE EXPLANATION OF THE ASSESSEE AND HELD THAT PROVISIONS OF SECTION 13 OF THE ACT ARE ATTRACTED I N THE CASE OF THE ASSESSEE AND ACCORDINGLY DENIED EXEMPTI ON 6 UNDER SECTION 11(1) OF THE INCOME TAX ACT WITH THE FOLLOWING OBSERVATIONS : A) THE AMOUNT OF SECURITY GIVEN WAS ALARMINGLY HIGH AND THERE IS NO CLAUSE IN THE AGREEMENT TO PROHIBIT THE LANDLORD NOT TO RENT OUT THE OTHER FLOORS TO ANY OTHER PERSON IN THE RENT DEE D. (B) THE APPELLANT TRUST HAD ENTERED INTO AN AGREEME NT WITH M/S WRITER AND PUBLISHERS LTD, FOR PLOT NO. 11-12, SECTOR-25, CHANDIGARH FOR PROVIDING BENEFIT TO M/S CHITKARA EDUCATION (P) L TD. THEREFORE, UTILITIES WERE MADE AVAILABLE TO ANOTHER CONCERN AND SO THE CASE OF THE APPELLANT TRUST WAS COVERED BY THE PROVISIONS O F SECTION 13(2)(D) READ WITH SECTION 13(3)(E) OF THE ACT. (C) THE SECURITY WAS PAID IN THE YEAR 2008-09 A ND HAS NOT BEEN ADJUSTED AGAINST RENT NOR HAS BEEN RECEIVED BA CK AND SO UNDUE BENEFIT S CONTINUED TO BE GIVEN TO THE TRUST. (D) A SUM EQUIVALENT TO THREE MONTHS RENT I.E. RS. 18,00,000/- WAS REASONABLE TO BE ACCEPTED AS THE AM OUNT OF SECURITY AND THE REMAINING AMOUNT OF RS. 1,56 ,00,000/- WAS TREATED AS ADVANCE GIVEN FOR NON BUSINESS PU RPOSES. THE ASSESSING OFFICER COMPUTED INTEREST @ 12% ON TH IS AMOUNT AND ADDED THE SAME TO THE TOTAL INCOME OF THE APPEL LANT. E) THE ASSESSING OFFICER DISALLOWED INTEREST @ 12% ON THE AMOUNT GIVEN AS ADVANCE TO THE SUPPLIERS; ADVANCE A GAINST PROJECTS AND ON CAPITAL WORK IN PROGRESS. THE DISAL LOWANCE WAS WORKED OUT AT RS. 48,01,183/-. (F) THE ASSESSING OFFICER ALSO DISALLOWED THE AMOUN T OF DONATION OF RS. 1,30,100/-, CLAIMED AS EXPENDITURE 8. THE LD. CIT(APPEALS), CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND MATERIAL ON RECORD, DECIDED THE IS SUE IN FAVOUR OF THE ASSESSEE AND HELD THAT PROVISIONS OF SECTION 13 ARE NOT ATTRACTED IN THE CASE, THEREFORE, ASSESS EE IS ELIGIBLE FOR EXEMPTION UNDER SECTION 11(1) OF THE A CT AND ACCORDINGLY ALLOWED THIS GROUND OF APPEAL OF THE AS SESSEE. 7 THE FINDINGS OF LD. CIT(APPEALS) IN PARAS 4.1 TO 4. 8 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 4.1 I HAVE CONSIDERED FACTS OF THE ISSUE AND H AVE ALSO GONE THROUGH THE COPY OF AGREEMENTS ENTERED INTO BY THE TRUST WITH S HRI MOHIT CHITKARA AND OTHER RELEVANT DOCUMENTS. THE BASEMENT AND GROUND FLOOR O F THE IMPUGNED PROPERTY WAS TAKEN ON RENT FROM SHRI MOHIT CHITKARA WITH EFFECT FROM 01.04.2008. FOR THE SAKE OF READY REFERENCE; CLAUSES (1), (3), (4) AND (17) ARE REPRODUCED AS UNDER: '1. THAT THE LEASE SHALL BE FOR A LOC K IN PERIOD OF THREE YEARS COMMENCING W.E.F. 01.04.2008. 3. THAT THE LESSEE HAS TAKEN THE DEMISED PREMISES SUBJ ECT TO THE CONDITION THAT THE LESSOR SHALL NOT LET OUT THE 1ST AND SECOND FLOOR WITHOUT THE WRITTEN CONSENT OF THE LESSEE. IN CASE THE LESS EE WANTS TO TAKE THE 1ST 85 SECOND FLOOR ALSO ON RENT, THE RENT OF THE ENTIR E PREMISES COMPRISING OF BASEMENT, GROUND FLOOR, 1ST FLOOR AND SECOND FLOOR SHALL BE AT RS. 7,50,OOO/- P.M. SUBJECT TO THE FACT THAT LESSOR SHA LL KEEP AREA OF NOT MORE THAN 100 SQ, FT. IN HIS POSSESSION ON 1ST OR 2 ND FLOOR AS DESIRED BY HIM. THIS OPTION IS TO BE EXERCISED BY THE LESSEE WITHIN 3 YE ARS FROM THE DATE OF THE AGREEMENT. IN CASE OF FAILURE, LESSOR SHALL BE FREE TO LET OUT FIRST AND 2 ND FLOOR AT HIS OWN AND LESSEE SHALL NOT HAVE ANY RIGH T/CLAIM FOR THAT. 4. THAT THE LEASE SHALL BE FOR A PERIOD OF 15 YEARS I- E. UPTO 31.3.2023. EXTENDABLE WITH THE MUTUAL CONSENT OF BOTH THE PART IES. 17. THAT AT THE REQUEST OF THE LESSEE, THE LESSOR H AS GIVEN THE DEMISED PREMISES SCO 160-61, SECTOR 9C, CHANDIGARH AS A COLLATERAL SECURITY AS 2 ND CHARGE TO PUNJAB AND SIND BANK & PUNJAB NATIONAL BANK FOR SECURING CREDIT FACILITIES TO THE LESSEE TRUST. HENCE, THE LESSOR DURING THE CURRENCY OF LEA SE CANNOT TRANSFER, MORTGAGE TO ANY OTHER PERSON, SELL, ASSIG N OR OTHERWISE CREATE ANY CHARGE OR INTEREST IN THE DEMISED PREMIS ES WITHOUT THE PRIOR CONSENT OF THE LESSEE. 4.1. THUS, THE LEASE WAS FOR FIFTEEN YEARS I.E. UPTO 31.03.2023 WITH A LOCK IN PERIOD OF THREE YEARS COMMENCING FROM 01.04 .2008. AS PER CLAUSE (3), THE LESSOR WAS NOT TO LET OUT THE FIRST AND SE COND FLOOR WITHOUT WRITTEN CONSENT OF THE LESSEE AND TOTAL RENT OF ALL THESE FOUR FLOORS WAS TO BE 7,50,000/- PER MONTH SUBJECT TO THE FACT THAT LE SSOR COULD NOT KEEP AREA 8 OF MORE THAN 100 SQ. FT IN HIS POSSESSION OF FIRST OR SECOND FLOOR. THE OPTION OF TAKING FIRST AND SECOND FLOOR ON RENT WAS TO BE EXERCISED BY THE APPELLANT WITHIN THREE YEARS FROM THE DATE OF A GREEMENT. SUBSEQUENTLY, THE FIRST AND SECOND FLOOR WERE TAKEN ON RENT BY THE APPELLANT AFTER TWO YEARS. AS PER CLAUSE (17), THE PREMISES HAD BEEN GIVEN AS A COLLATERAL SECURITY AS SECOND CHARGE TO BANKS FOR SECURING CREDIT FACILITIES TO THE APPELLANT TRUST. 4.2 THE SECURITY GIVEN TO SHRI MOHIT CHITKARA BY TH E APPELLANT TRUST WAS OF RS. 1,74,00,000/-, AGAINST WHICH THE APPELLANT TRUS T DERIVED FOLLOWING ADVANTAGES: (I) THE LESSOR I.E. SHRI MOHIT CHITKARA COULD NOT L ET OUT FIRST AND SECOND FLOOR OF THE IMPUGNED PROPERTY, SINCE THE APPELLANT TRUST HAD ASKED FOR THESE FLOORS TO BE TAKEN ON RENT. THIS MEANS THAT S HRI MOHIT CHITKARA SUFFERED NOTIONAL LOSS TO THE EXTENT OF THE MARKET RENT OF FIRST AND SECOND FLOOR FOR TWO YEARS. (II) THE PROPERTY IS AVAILABLE TO THE APPELLANT TRU ST FOR A PERIOD OF FIFTEEN YEARS. (III) THE APPELLANT GOT A PRIME PROPERTY IN A C OMMERCIAL SECTOR. (IV) THE LESSOR COULD NOT HAVE SOLD THE PROPERTY, S INCE THE PROPERTY HAD BEEN GIVEN AS COLLATERAL SECURITY AS SECOND CHARGE TO THE BANKS FOR CREDIT FACILITIES TO THE APPELLANT TRUST. (V) THE APPELLANT TRUST GOT CREDIT FACILITIES FROM THE BANKS BECAUSE LESSOR HAD AGREED FOR THE PROPERTY TO BE GIVEN AS COLLATER AL SECURITY. (VI) THE LESSOR CANNOT SELL THE PREMISES DURING THE CURRENCY OF LEASE AND IF HE WANTS TO SELL, HE HAS TO FIRST OFFER THE SAME TO THE APPELLANT AT, THE LOWEST MARKET PRICE. (VII) DURING THE CURRENCY OF LEASE, THE LESSOR WAS PREVENTED FROM TRANSFERRING, MORTGAGING OR OTHERWISE CREATING INTE REST IN THE PROPERTY TO ANYONE ELSE WITHOUT PRIOR CONSENT OF THE APPELLANT TRUST. (VIII) THE APPELLANT HAD GOT THE BUILDING FULLY FUR NISHED WITH CENTRAL AIR CONDITIONING, GENERATOR SET, PANTRY ROOM, FURNITURE , EPBX INSTALLED, 24 HOURS WATER SUPPLY ETC. 9 (IX) THE MONTHLY RENT WORKS OUT TO APPROXIMATELY RS . 62 PER SQ. FT. ONLY FOR THE ENTIRE PROPERTY OF MORE THAN 12,000 SQ. FT. (X) THE INTEREST ON THE SECURITY AMOUNT EVEN @ 12% WORKS OUT TO RS. 20,88,000/- PER ANNUM, AGAINST WHICH THE APPELLANT GOT FULLY FURNISHED PREMISES WITH CENTRAL AIR CONDITIONING, GENERATOR S ET AND FURNITURE ETC @ RS. 62 PER SQ. FT. (XI) THE AMOUNT OF SECURITY WAS A FAIR PRICE FOR A FURNISHED ACCOMMODATION. EVEN IF IT IS TAKEN TO BE NOTIONA L ADDITIONAL PRICE AND INTEREST ON THE AMOUNT OF SECURITY IS TAKEN INTO AC COUNT, IT IS NOT A HIGH AMOUNT FOR FURNISHED PREMISES OF MORE THAN 12,000 S Q. FT (XII) NO ADDITIONAL SECURITY WAS PAID FOR TAKING APPROXIMATELY 7.000 SQ. FT. ON RENT ON THE FIRST AND SECOND FLOOR AT A MEAG ER RENT OF RS. 1,50.000/- PER MONTH ONLY. (XIII) THIS PROPERTY IS ON LEASE UPTO THE YEAR 2023 WITH NO INCREASE IN RENT WHILE IN THE CASE OF OTHER PROPERTIES, THE LEASE WA S ONLY FOR THREE YEARS WITH INCREASE IN RENT. 4.3 ONE OF THE OBJECTIONS OF THE ASSESSING OFFICER FOR CONCLUDING THAT PROVISIONS OF SECTION 13(L)(C) WERE ATTRACTED, WAS THAT THE SECURITY GIVEN WAS AT AN ALARMINGLY HIGH PROPORTION OF THE MONTHLY RENT. THE ASSESSING OFFICER DID NOT TAKE INTO ACCOUNT THAT FACT THAT TH E PROPERTY IN THE COMMERCIAL AREA OF SECTOR-9, CHANDIGARH CANNOT BE C OMPARED WITH THE PROPERTIES IN SECTOR-25, CHANDIGARH, SINCE O NLY COMPARABLES CAN BE COMPARED. 4.4 THE ASSESSING OFFICER HAS NOT CONSIDERED THE REAL A SSESSABLE VALUE WITH RESPECT TO THE ATTENDING CIRCUMSTANCES. THE ASSESSING OFFICER COMPLETELY IGNORED PECULIAR FEATURES OF THIS PROP ERTY VIZ. COMMERCIAL LOCATION, CENTRALLY AIR CONDITIONING AND FULLY FURN ISHED WITH GENERATOR SET. THE RENT WAS FAR LESS THAN THE MARKET RENT AND THE PROPERTY WAS MORTGAGED WITH BANK AS A GUARANTEE TO HELP THE APPE LLANT LESSEE TO GET CREDIT FACILITY FOR WHICH NO GUARANTEE FEE WAS CHAR GED BY THE LESSOR. ALSO, IF THE SELLER WANTED TO SELL THE PROPERTY, THE FIRS T CHOICE WAS TO BE GIVEN TO THE APPELLANT AND WITH SO MANY ADVERSE FACTORS AGAI NST THE LESSOR, NOBODY WOULD HAVE DARED TO BUY THIS PROPERTY. PROBABLY THE SE FACTORS WEIGHED IN FAVOUR OF THE APPELLANT IN THE SCRUTINY ASSESSMENT OF A.Y. 2008-09, WHEN THE ASSESSING OFFICER HAD ALLOWED EXEMPTION TO THE APPE LLANT. 10 4.5 THE OBSERVATION OF THE ASSESSING OFFICER THAT THERE IS NO CLAUSE IN THE RENT DEED TO PROHIBIT THE LANDLORD NOT TO RENT OUT THE OTHER FLOORS IS NOT CORRECT, SINCE SUCH A CLAUSE (CLAUSE 3) DULY EXISTS IN THE LEASE AGREEMENT. 4.6 THE OBSERVATION OF THE ASSESSING OFFICER THA T AS PER THE LEASE AGREEMENT BETWEEN THE APPELLANT TRUST AND M/S WRITE R AND PUBLISHERS LTD. FOR PLOT NO. 11-12, SECTOR-25, CHANDIGARH, THE BENEFIT IS TO BE PROVIDED TO M/S CHITKARA EDUCATION (P) LTD. THE OBSERVATION MADE BY THE ASSESSING OFFICER IS COMPLETELY VAGUE. THE LD. COUNSEL HAS INFORMED THAT NO TRANSACTION HAS BEEN MADE BY THE A PPELLANT WITH THIS CONCERN AND SO QUESTION OF ANY BENEFIT DOES NOT ARI SE. IN ANY CASE, THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON R ECORD TO PROVE THAT ANY BENEFIT WAS PASSED TO THE SAID CONCERN. 4.7 THE ASSESSING OFFICER HAS ALSO OBSERVED THAT THOUGH THE PAYMENT WAS MADE IN THE YEAR 2008-09, THE SAME HAS NOT BEE N ADJUSTED OR RETURNED TILL DATE AND SO UNDUE BENEFIT CONTINUES T O BE GIVEN TO THE TRUSTEE. I HAVE ALREADY DISCUSSED IN THE PRECEDIN G PARAGRAPHS AS TO HOW THE PAYMENT OF SECURITY WAS NOT AN UNDUE BENEFIT GI VEN TO THE TRUSTEE. MOREOVER, THE CASES OF THE APPELLANT WERE FINALIZED UNDER SECTION 143(3) IN THE YEAR, IN WHICH SECURITY WAS GIVEN I.E. A.Y. 200 8-09 AND IN THE SUBSEQUENT YEAR I.E. A.Y. 2010-11 AND 'NIL' DECLARE D INCOME WAS ACCEPTED IN BOTH OF THESE YEARS. 4.8 IN VIEW OF THE ABOVE, IT IS HELD THAT THE FINDI NG OF THE ASSESSING OFFICER THAT THE PROVISIONS OF SECTION 13 ARE ATTRA CTED IS NOT CORRECT. THE APPELLANT IS DULY ELIGIBLE FOR EXEMPTION U/S 11(1) OF THE ACT. OF COURSE, THE ASSESSING OFFICER WILL CONSIDER WHETHER THE CON DITION SPECIFIED IN SECTION 11(2) IS SATISFIED TO ENABLE THE APPELLANT TO CLAIM EXEMPTION U/S 11(1) OF THE ACT. GROUNDS OF APPEAL NOS. 2 & 3 ARE ALLOWED. 9. THE LD. DR RELIED UPON ORDER OF THE ASSESSING OF FICER AND SUBMITTED THAT THE INTEREST FREE SECURITY WAS H IGHER BY 29% OF THE RENT PER MONTH. SHRI MOHIT CHITKARA IS ONE OF THE TRUSTEE OF THE ASSESSEE TRUST AND BY FOLLOWING COMPARABLE CASES OF SECTOR 25, CHANDIGARH AND OF PARWANOO, ASSESSING OFFICER WAS JUSTIFIED IN DENYIN G 11 EXEMPTION UNDER SECTION 11 OF THE ACT. ON THE OTHE R HAND, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISS IONS MADE BEFORE ASSESSING OFFICER AND REFERRED TO PB-1 WHICH IS LEASE DEED IN QUESTION IN WHICH THE PROPERTY WAS TAKEN SUBJECT TO CONDITION THAT LESSOR SHALL NOT LET OUT THE FIRST AND SECOND FLOOR WITHOUT WRITTEN CONSENT OF THE LES SEE. IN THE SAME AGREEMENT IN CLAUSE 23, IT IS MENTIONED TH AT RENT OF RS. 6 LACS PER MONTH WAS ON AGREED BASIS OF FULL Y FURNISHED BASEMENT AND GROUND FLOOR WITH ALL AMENIT IES AS AGAINST THE MARKET RENT OF RS. 10 LACS PER MONTH SU BJECT TO CONDITION THAT LESSEE SHALL GIVE AN INTEREST FREE S ECURITY WHICH WOULD BE REFUNDED ON VACATION OF THE PROPERTY . HE HAS SUBMITTED THAT IN PRECEDING ASSESSMENT YEARS 20 09-10, ASSESSING OFFICER ACCEPTED THE SAME ISSUE IN FAVOUR OF THE ASSESSEE IN ORDER UNDER SECTION 143(3) OF THE ACT D ATED 20.12.2011 (PB-76) AND IN ASSESSMENT YEAR 2010-11 U NDER SECTION 143(3) DATED 30.01.2013 (PB-80). HE HAS, THEREFORE, SUBMITTED THAT ONCE A SIMILAR ISSUE HAS BEEN EXAMINED BY ASSESSING OFFICER AND CLAIM OF ASSESSEE HAS BEEN ACCEPTED OF EXEMPTION UNDER SECTION 11 OF THE ACT, THE SAME ISSUE SHOULD NOT BE CONTESTED BY THE DEPAR TMENT IN SUBSEQUENT YEAR. HE HAS REFERRED TO SUBMISSIONS MADE BEFORE ASSESSING OFFICER IN EARLIER YEARS ON THE SA ME ISSUE EXPLAINING THE SAME FACTS AS HAVE BEEN EXPLAINED IN THIS CASE, COPY OF WHICH IS FILED AT PB-38 WHICH IS REPL Y BEFORE ASSESSING OFFICER IN ASSESSMENT YEAR 2009-10. PB-43 IS THE EXPLANATION, IN THE SAME REPLY WITH REGARD TO RENT FREE SECURITY IN QUESTION GIVEN TO SHRI MOHIT CHITKARA. PB-117 IS THE REPLY FILED BEFORE ASSESSING OFFICER IN ASSE SSMENT 12 YEAR UNDER APPEAL EXPLAINING HOW THE COMPARABLE DEM ISED PROPERTIES HAVE NO SIMILAR FACTS. PB-11 IS RENT AG REEMENT OF DAINIK BHASKAR AND IT IS EXPLAINED THAT THE TERM S AND CONDITIONS OF THE ASSESSEE AND DAINIK BHASKAR ARE D IFFERENT BECAUSE IN THE CASE OF THE ASSESSEE, FURNISHED ACCOMMODATION WAS GIVEN WITH COLLATERAL SECURITIES OF THE DEMISED PROPERTY. PERIOD OF TENANCY IS FOR 15 YEARS AND THERE IS NO HIGHER INCREASE IN THE RENT ETC. NO AM OUNT OF ANY ADDITIONAL SECURITY IS GIVEN IN ASSESSMENT YEAR UNDER APPEAL, THEREFORE, DEPARTMENT SHOULD FOLLOW RULE OF CONSISTENCY AND RELIED UPON DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF RADHA SOAMI SATSANG 19 3 ITR 321. 10. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERI AL ON RECORD. THE ASSESSEE HAS ENTERED INTO LEASE AGREEM ENT WITH SHRI MOHIT CHITKARA (PB-1) ON 01.04.2008, THRO UGH WHICH PROPERTY IN QUESTION WAS GIVEN ON RENT TO THE ASSESSEE FOR 15 YEARS. THE PROPERTY IS SITUATED IN THE PREMISES OF SCO 160-161 SECTOR 9-C, CHANDIGARH. IT IS A COMMERCIAL PROPERTY. THE ASSESSING OFFICER HAS REF ERRED TO THE PROPERTIES OF DAINIK BHASKAR BUILDING WHICH IS ADMITTEDLY SITUATED IN SECTOR 25 WHICH IS AT DIFFER ENT LOCATION AND HAVE DIFFERENT ADVANTAGES AS HAVE BEEN PROVIDED IN THE CASE OF THE ASSESSEE. PARWANOO PRO PERTY IS IN HIMACHAL PRADESH AND AS SUCH, BOTH COULD NOT BE CONSIDERED TO BE COMPARABLE PROPERTIES. FURTHER, TH EIR TERMS AND CONDITIONS ARE DIFFERENT BECAUSE IN THE C ASE OF THE ASSESSEE, PROPERTY ON RENT WAS TAKEN WHICH WAS FULLY 13 FURNISHED AND SUBJECT TO COLLATERAL SECURITIES. PE RIOD OF LEASE WAS 15 YEARS AND THERE WAS NO ABNORMAL INCREA SE IN THE RENT. THE LD. CIT(APPEALS), THEREFORE, CORRECT LY HELD THAT THE PROPERTIES REFERRED TO BY THE ASSESSING OF FICER IN THE ASSESSMENT ORDER ARE NOT COMPARABLE CASES TO CO MPARE THE REASONABLE RENT. IT WAS ALSO MENTIONED IN THE RENT AGREEMENT THAT THE LESSOR SHALL NOT LET OUT FIRST A ND SECOND FLOOR PROPERTY WITHOUT THE CONSENT OF THE LESSEE I. E. ASSESSEE. ULTIMATELY, THE ASSESSEE HAS TAKEN LEASE D PROPERTIES ON RENT SUBSEQUENTLY. THE RENT OF THE A SSESSEE WAS COMPARATIVELY LOW IN ASSESSMENT YEAR 2009-10 WH EN THE PROPERTY WAS TAKEN ON LEASE BY ASSESSEE I.E. ON 01.04.2008. SAME ISSUE WAS EXAMINED BY THE ASSESSI NG OFFICER UNDER SECTION 143(3). THE REPLIES OF THE A SSESSEE ARE AVAILABLE ON RECORD WHICH SHOWS THAT ASSESSING OFFICER HAS EXAMINED THE IDENTICAL ISSUE AND ACCEPTED THE NIL RETURNED INCOME OF THE ASSESSEE HOLDING THAT ASSESS EE IS ENTITLED FOR EXEMPTION UNDER SECTION 11 & 12 OF THE INCOME TAX ACT BEING CHARITABLE TRUST AND THE SAME VIEWS T AKEN BY THE ASSESSING OFFICER IN SUBSEQUENT ASSESSMENT YEAR 2010- 11 IN THE ORDER UNDER SECTION 143(3) DATED 30.01.20 13. IT IS, THEREFORE, CLEARLY ESTABLISHED ON RECORD THAT I N THE YEAR WHEN INTEREST FREE SECURITY WAS GIVEN BY THE ASSESS EE TO SHRI MOHIT CHITKARA, OWNER OF THE DEMISED PROPERTY, THE DEPARTMENT DID NOT TAKE ANY ADVERSE VIEW AGAINST TH E ASSESSEE AND ALLOWED EXEMPTION UNDER SECTION 11 & 1 2 OF THE ACT ACCEPTING THE NIL RETURNED INCOME. THERE FORE, DEPARTMENT SHOULD NOT TAKE A DIFFERENT VIEW IN SUBS EQUENT YEAR ON THE SAME FACTS AND CIRCUMSTANCES AND ON THE 14 IDENTICAL ISSUE. IT IS ALSO NOT IN DISPUTE THAT TH E OWNER OF THE PROPERTY PROVIDED VARIOUS FACILITIES TO THE ASS ESSEE AND NO OTHER ADDITIONAL SECURITY IS GIVEN IN ASSESSMENT YEAR UNDER APPEAL. IT IS ALSO NOT IN DISPUTE THAT THE T ENANTED PROPERTY WAS GIVEN IN COLLATERAL SECURITY TO PUNJAB & SIND BANK AND PUNJAB NATIONAL BANK FOR ASSESSEE'S CREDIT FACILITIES. THE PROPERTY IN QUESTION WAS FURNISHED ACCOMMODATION PROVIDED BY THE OWNER TO THE ASSESSEE BUT IN ALLEGED COMPARABLE CASES, THESE WERE NOT FURNISH ED PROPERTIES. DUE TO THE ABOVE REASONS, OWNER OF THE PROPERTY COULD NOT SELL OR TRANSFER THE PROPERTY IN QUESTION TO ANY OTHER PERSON SO LONG THE TENANCY CONTINUED I N FAVOUR OF THE ASSESSEE. THE LD. CIT(APPEALS) WAS, THEREFORE, JUSTIFIED IN HOLDING THAT ASSESSING OFFI CER HAS NOT CONSIDERED THE REAL ASSESSABLE VALUE WITH RESPE CT TO ATTENDING CIRCUMSTANCES AS NOTED ABOVE,. IF TOTALI TY OF THE FACTS AND CIRCUMSTANCES ARE TAKEN INTO CONSIDERATIO N IN THE LIGHT OF THE REGULAR ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT I N PRECEDING ASSESSMENT YEARS 2009-10 AND 2010-11, WE DO NOT FIND ANY JUSTIFICATION FOR AUTHORITIES BELOW TO TAKE A DIFFERENT VIEW IN SUBSEQUENT ASSESSMENT YEAR ON THE SAME SET OF FACTS. HON'BLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG 193 ITR 321 HELD THAT THE REVENUE AUTHORITIES SHOULD MAINTAIN/FOLLOW THE RULE OF CONS ISTENCY. HON'BLE DELHI HIGH COURT IN THE CASE OF A.R.J. SECU RITY PRINTERS 264 ITR 276 FOLLOWING THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF RADHA SOAMI SA TSANG (SUPRA) HELD THAT FOR SAKE OF CONSISTENCY AND FINALITY OF 15 LITIGATION, EARLIER DECISIONS ON THE SAME QUESTION SHOULD NOT BE REOPENED UNLESS NEW FACTS COME TO THE KNOWLEDGE. HON'BLE DELHI HIGH COURT IN THE CASE OF ESCORTS LTD . 338 ITR 435 HELD THAT DECISION REGARDING NATURE OF TRANSACTION CONTINUING FOR SEVERAL YEARS, CONSISTENCY SHOULD BE MAINTAINED. HON'BLE MADHYA PRADESH HIGH COURT IN THE CASE OF GODAWARI CORPORATION LTD. 156 ITR 835 HELD THAT INCOME TAX AUTHORITIES SHOULD FOLLOW RULE OF CONSIS TENCY EVEN IF PRINCIPLE OF RES-JUDICATA DOES NOT APPLY. HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF VIKAS CH EMI GUM (INDIA) 276 ITR 32 HELD THAT WHEN SOURCE OF INCOME IN EARLIER YEAR NOT CHALLENGED, NEED NOT OPEN TO CH ALLENGE THE SAME SOURCE IN SUBSEQUENT YEAR. 11. CONSIDERING THE FACTS AND CIRCUMSTANCES IN THE LIGHT OF THE ABOVE DECISIONS, IT IS CLEAR THAT THE FACTS ARE IDENTICAL AS HAVE BEEN CONSIDERED IN THE EARLIER YEARS 2009-10 A ND 2010-11, THEREFORE THE INCOME TAX AUTHORITIES SHOUL D NOT TAKE A DIFFERENT VIEW BECAUSE NO NEW FACTS HAVE BEE N BROUGHT ON RECORD, PARTICULARLY WHEN NO ADDITIONAL INTEREST FREE SECURITY HAVE BEEN GIVEN IN ASSESSMENT YEAR UNDER A PPEAL. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY JU STIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(APPEALS) . WE CONFIRM HIS ORDER AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 12. IN THE RESULT, GROUND NO. 2 OF THE APPEAL OF TH E REVENUE IS DISMISSED. 16 13. ON GROUND NOS. 3, 4 AND 5, THE LD. CIT(APPEALS) IN VIEW OF HIS FINDINGS THAT ASSESSEE IS ELIGIBLE FOR EXEMP TION UNDER SECTION 11(1) OF THE ACT SUBJECTS TO FULFILLING OF THE CONDITION OF SECTION 11(2) OF THE ACT, HELD THAT NO DISALLOWA NCE COULD BE MADE ON WHICH REVENUE HAS RAISED GROUND NOS. 3, 4 & 5 AND ACCORDINGLY DELETED THIS ADDITION. 14. LD. REPRESENTATIVES OF BOTH THE PARTIES SUBMITT ED THAT THESE ARE CONSEQUENTIAL GROUNDS OF APPEAL AS BASED ON FINDINGS GIVEN ON GROUND NO. 2 ABOVE. SINCE ON GRO UND NO. 2, WE HAVE MAINTAINED THE FINDINGS OF THE LD. CIT(APPE ALS) AND DISMISSED GROUND NO. 2 OF THE DEPARTMENTAL APPEAL, THEREFORE, GROUND NOS. 3, 4 AND 5 OF THE DEPARTMENT AL APPEAL ARE DISMISSED. 15. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA MEHROTRA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9 TH OCTOBER, 2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD